As markets continue to decline Labour and National are trading blows over which party would be better to guide New Zealand through the economic storm.
Finance Minister Michael Cullen today welcomed the comments of former National leader and Reserve Bank governor Don Brash that the state of theGovernment's books left New Zealand in a better state than many countries to get through the coming months.
Dr Brash said the banking system in this country was also strong. It was well capitalised and did not have the exposure to sub-prime mortgages that US institutions did.
Also in this country's favour, the Government's fiscal position was good and its debt was low.
"That also puts us in a good place if we have to run a deficit for a few years," he said.
The Government is yet to open the books ahead of the election, but most are predicting that the forecast cash deficits of more than $3 billion a year over the next four years will get worse.
Dr Cullen said Labour had built up assets and reduced debt, but National's willingness to borrow for additional tax cuts in the tightest global credit conditions in over a generation was risky and irresponsible.
National has indicated it will up the ante in the tax cut programme, but the party's finance spokesman Bill English said Labour were trying to have it both ways.
"Helen Clark's staff have been spinning that there will be major new spending announcements for the election, while Michael Cullen's crowing about how he has spent the lot and the cupboard is bare. They can't both be right," Mr English said.
The reality was that New Zealand was in recession and the United States economy was looking shaky, he said.
"The appropriate fiscal policy response is a conservative one, with any new initiatives clearly aimed at strengthening our economy," Mr English said.
National would bring discipline to government spending, stop the rise in bureaucracy, and have ongoing tax cuts, he said.
